Investing your Money
There are many ways you can invest your money, there are riskier options that provide higher returns and less risky investments which also bring in returns, however they will be less profitable. The greatest benefit in investing your money is to earn extra money while you are doing other things with your time. Your investments will keep earning you money while you are sleeping or at your day job or even on vacation, spending time with your family and love ones.
Investments can earn you passive income and unlike a salary there is no limit to how much you can grow your passive income to be and you don’t have to be stuck in an office or certain location at any given time.
After you factor in your expenses you’ll be left with a positive cash flow, that you can use in anyway you see fit, to improve the quality of life for you or others. There are also investments suggest starting a business which can be passive but initially they might require you to be there as a manager to hire and supervise operations until you can hire someone more efficient and experienced than you at managing the business.
The reason I prefer passive income is because there are only 24 hours in the day so working an hourly job or working for a salary are limited with a ceiling point. These types of incomes create a ceiling or a box around the possibilities and opportunities. With passive income I don’t need to spend my time in front of a computer or a chair making others money. I am free to sleep in, or spend time with my family, go to religious gatherings, or help volunteer. Investing money has risk to it but depending on your knowledge and experience you can limit your risk. You can also improve the quality of your life and get the things you want get conpleted.
Cd’s, Savings Account, Bonds
With all the saved money you have, you can invest in CDs and savings accounts and bonds. These types of investments are the most secure because most banks have FDIC which means your accounts are insured up to $250,000. You can never lose your money, what you put in can always be redeemed back including some interest. The interest with these options are usually very low because they are so secure. Usually nowadays an interest rates on savings accounts are less than 1%. The highest I’ve seen being offered by savings account is 2.5%. This is on a yearly basis so a savings account of $100,000 can provide you with a $2500 income.
CDs and bonds usually provide a 3 to 5% interest return on investment annually. Unlike savings account your money cannot be taken out of a CD or bond without paying a fee. Once you commit to a CD or bond investment you are locked into the investment which could be a one year or five year or 10 year investment. The interest and profit is collectible annually however the original investment is not refundable until the end of the term, if you decide to take the money back there will be a fee or penalty involved.
These investments are just a few of the options available. They are the securest because they have the least risk involved, however the returns on these investments are also little. If you are considering these investments, I suggest you take into consideration the inflation rates that are currently going on, at this time the inflation rate is about 4% so savings accounts are truly bringing you a -3% return on investment, if you keep the money under your mattress or is cash form it is -4% return on investment.
Mutual Funds, Stock
Stocks and mutual funds are a very attractive investment because of the high rates of return on investments. The average rate of return for stocks and mutual funds are 10 to 18%. Stock is a piece of ownership in a company, so you are essentially given the opportunity to own a portion of the company so you get a piece of the risk and loss and expense along with the profit of the company. Most companies usually go up in value overtime causing the stock prices to rise, there is also risk that the company could fail and go bankrupt and you are left with nothing.
Mutual funds are usually companies or funds that invest in multiple stocks in different industries.So if one of the stocks part of the mutual fund fails and at the same time another stock goes up the value could remain the same. For this reason people who do not know much about stocks and do not have the time to follow the stock market feel safe investing with mutual funds because the two parties are trying to have a fund that does great, thats growing and will provide high returns on investments.
Investing in the stock market can be a long term or short term investment. Some trade the market actively and are looking to trade every day they are known as the day traders, trading in the profits from their stocks daily. Some investors also like to invest in companies and collect the dividends, and hold onto their stock interest for long-term appreciation.
Real Estate- Passive Income & Appriciation Cash Flow
My favorite all-time investment is real estate. There is residential real estate which includes single-family homes and multi family homes and bigger apartment complexes which can also include condos and co-ops. Although some consider bigger apartment complex units to be commercial because they’re mainly for collecting rental incomes and profits.
Commercial properties are usually storefronts warehouse gas stations strip malls, office buildings and medical centers usually where business is conducted and usually no one lives and sleeps overnight. You could also find mixed use property where the first floor is usually a business and upper levels are used for residential purposes.
Real estate investments can be used to accumulate money in the form of cash flow from rental income and also from appreciation of the properties values. Some individuals like to fix and flip properties. Buying them on foreclosure or short sales, they take the distressed and lower price properties, fix them up either with cosmetic repairs or full renovations and then they relist them and sell them as soon as a month or even six months for a profit.
Some investors hold onto properties long-term they buy properties priced below market value and collect the rent to pay down the mortgage and still have an extra flow of money. These investors also increase their net worth because property values increase causing their assets to increase, causing it to increase their net worth. These investors usually hire property management companies to manage their investments so that they can truly be passive income because owning property comes with maintenance and responsibilities.
Buying and Selling Items, Automobiles, Houses, Collectables
In economics class, I learned that price is determined by supply over demand. Meaning if the demand is high and supplies low, the price for the product or service is going to be higher than usual or high in general. It is this basic equation or formula that causes entrepreneurs to provide products and services, they are problem-solving to fulfill the demand and supply the product or service needed to consumers.
Entrepreneur sell products or services that all differ and vary. These individuals buy items such as automobiles, houses, electronics, clothing, jewelry and resell them to turn a profit. Some items provide a small margin while they are small items that are in high demand leading to higher sales in volume and turnover. Another way is to sell higher priced items where a bigger margin can be made. Buyers and sellers trade new products or even used items usually whatever they know is in demand. With access to Internet sites, an entrepreneurs can virtually sell products all over the globe, if they can’t find a buyer in one market they might find one in another state or country. There are even individuals who are willing to go through door to door sales in their neighborhood or in another neighborhood providing products or services that might be in high demand.
Some individuals also buy electronics that they pre-order such as new phones, or gaming consoles that you know will be hard for buyers to get when they are released due to a short supply of them. These individuals buy these items and sell them for a hefty margin to others who did not anticipate or plan for this product and are usually buying off impulse and instant gratification.
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